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Nordic American can prosper in good times and bad, says CEO

Bermuda-based Nordic American Tankers will be a good position to reap the benefits from the markets as it develops through expanding its fleet of vessels and boosting its earnings potential.

That is according to the company's chairman and CEO Herbjorn Hansson, who said in a letter to shareholders that Nordic's proven business model and strong balance sheet would enable it to prosper in good times and bad.

He also revealed that the company had to pull one of its vessels out of Libya before the violence there escalated and that if nuclear power became a less attractive energy source as a result of the fallout from the Japanese disaster demand for oil may increase and thus shipping too.

“With our proven model and strong balance sheet we shall be in a position to reap the benefits in the markets as they develop, be they soft or strong from time to time,” he wrote.

“In soft tanker markets we expect to be in a position to acquire further vessels inexpensively compared to historic levels and thereby increasing the earnings and dividend capacity of the company. In firm spot tanker markets good results and dividends can be expected.

“Based on its transparent and predictable business model, growth of the fleet, strong balance sheet and available financial resources, Nordic American has a significant upside potential and a limited downside.”

Mr Hansson said that Nordic accepted delivery of its 16th suezmax trading vessel,

Nordic Vega, in December and expected to add

Nordic Harrier next month, with newbuilds,

Nordic Breeze and

Nordic Zenith, due for delivery in the third and fourth quarters of this year, respectively, thus growing its trading fleet will by more than 25 percent in space of one year. He said that the company had the financial resources to buy additional vessels and would look to further expansion when attractively priced second hand models became available.

Mr Hansson said that the attacks from pirates in the Gulf of Aden and Indian Ocean had grown and, in his view, the international community had not done enough to curtail the issue, prompting his company to take further protective measures to safeguard its crews and assets.

“The unrest in the Middle East and the conflict in Libya also represent challenges,” he wrote. “The region is vitally important to global oil production and has several key loading ports. We had a vessel at a Libyan loading port recently, but decided to leave before the violence escalated.

“There are no words that can adequately express our sorrow for the tragedy in Japan. Our Japanese friends are performing heroic feats in containing the serious consequences of the earthquake and tsunami. As far as the impact on our industry goes, it is too early to tell, but if nuclear power becomes less attractive, then it is reasonable to assume that the demand for other energy sources such as oil will increase.”

Mr Hansson said that Nordic had derived cost benefits from running a fleet consisting solely of modern suezmax vessels with double hulls, enabling the company to reduce its operating costs further over the past year and was always looking for ways to operate more efficiently.

So far this year he said the spot suezmax tanker rates as reported by IMAREX were on average higher than the those reported for Nordic's fleet in the fourth quarter of 2010, increasing to about $30,000 per day during this month.

The company's next dividend payment is planned for early June, representing its 55th consecutive quarterly payment.

Herbjorn Hansson

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Published March 23, 2011 at 10:13 am (Updated March 23, 2011 at 10:13 am)

Nordic American can prosper in good times and bad, says CEO

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